May 28, 2024 

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RULE OF CONSUMER EQUILIBRIUM: A condition of consumer equilibrium and utility maximization stating that the marginal utility-price ratio for all goods are equal. This rule is a handy way of checking for consumer equilibrium and utility maximization. If the rule is not satisfied, then consumer equilibrium and utility maximization are not achieved.

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Packing Up For MIGRATION

The quiet, peaceful town of Shady Valley has always been a great place for a pedestrian to wander through the workings of the economy. I'm afraid, though, that it's about to end. I've been offered another job -- an opportunity to wander around the streets of the distant mecca of Shady Lane to search out the mysteries of plant pathology. In Shady Lane, the sidewalks are smoother, the crosswalks are better, and the pay is much more lucrative. However, in that Shady Lane is in another time zone and several states away, migration would be my last topic of the day. There's a lot to be gained from this potential relocation of my residence, but it's not without cost. While I ponder this decision, perhaps you can help out by considering the topic of migration.

The Choice That Never Ends

We see in other places that decisions are based on a comparison of benefit and cost. Migration is example of this fundamental choice. As I consider the offer proposed by Shady Lane, I need to consider what benefit I can expect to accrue from packing up my supply of jogging shoes and practicing my duties in another locale. And I also need to consider what I will lose from such a move.

Let's consider some of the more important stuff that any potential migrant should consider before becoming an actual migrant.

  • Wages. Many potential migrants have the straightforward task of comparing the wage, salary, or income to be earned in the new locale with that presently earned. The obvious and reasonable conclusion is that you move to, or stay in, the place with the higher income. However, a simple comparison of incomes can be very misleading. Read on.

  • Living costs. In addition to your paycheck stub, it's important to consider prices and living costs between present and prospective locations. What may seem like a very lucrative income can be eaten up by higher food prices, housing expenses, taxes, and energy prices, to name a few. Many cities have what appear to be really, really high-paying jobs until you realize that their cost of living is also equally high (or even higher).

  • Chance of unemployment. A simple comparison of wages, even after adjusting for living cost, can also be misleading if you don't consider the likelihood of keeping your job. Some industries in some places are more prone to layoffs that others. In fact, such businesses often pay higher wages to help compensate for periods of unemployment. If you're thinking about packing up your own jogging shoes and heading off to a higher paying job, you need to find out the unemployment prospects.

  • Climate. As a licensed pedestrian, I'm very attuned to weather conditions. I do my best work in areas with moderate temperatures and limited precipitation. You probably have your own personal preferences -- hot, cold, snowy, wet, dry, humid, or whatever. Any prospective migration decision is best made after considering weather differences, information that's easily obtained from encyclopedias or almanacs.

    • Government services. We've already noted that taxes are a part of living cost in any locale, but you also need to consider what services those taxes bring. It's a pretty good rule of thumb that places with very low taxes also have few government services. Once again, your own personal preferences and lifestyle need to be considered in this regard. Do you have kids? Then better search out a location that spends it's taxes on education. Are you retired? If so, then find a place that has a favorable treatment of retirement income. State and city governments throughout the country provide a wide range in their mix of services (education, street repair, prison systems, police protection, etc.) and collect the taxes in many varied forms (sales, income, property, etc.)

    • Business products. Government services, however, aren't the only sorts of goods that vary from place to place. There's a great deal of differences in the types of products available from private businesses, as well. Some places have great shopping, unmatched entertainment, major league sporting events, and high-brow cultural events. Others have little more than the basic food, clothing, and shelter (plus a gasoline station). Be sure to check out the differences.

    • Acquaintances. Not to be overlooked in a migratory decision is whether or not you know anyone at the prospective location. This could include family, friends, friends of family, families of friends, or even some unknown person from your high school, college, hometown, or home country. The more people you know, the easier it is to adjust to a new place. For many, this is the only criterion considered, hoping that their connections will help them land a job and go from there.

    The migration decision is a comparison between the conditions in the prospective locale with those in the present one. However, even a very formal evaluation of the pluses and minuses of a possible move (with the assistance of a high-speed computer) showing more pluses than minuses, doesn't necessarily mean a move is advisable. There's one more thing to consider -- moving expenses.

    This might seem to be a trivial consideration, but when considered it could change some "good" moves into "bad." Moving cost include obvious costs like renting a U-Haul, or paying a moving company. However, it also includes all sorts of transitional stuff, such as time taken off from work, the trauma of relocation (often most pronounced for children), money lost from selling your house hurriedly below the market price (or being forced to pay two monthly mortgage payments if you can't sell), and a number of other seemingly minimal expenses that quickly add up to large sums.

    Some sadly disappointed migrants have discovered, after the fact, that they would have to to earn their more lucrative income in the new location for two or three hundred years before their moving expenses are paid off. Ah, such is life.

    Space -- The Labor Market Frontier

    As long as we're on the subject of migration, we might as well think about why it's even necessary. And make no mistake about it, migration is a necessary part of our economic lives. Throughout recorded history, and probably even longer, humans have been a wandering sort. We find a place, stay a while, then move on. It's hard to keep us pinned down to any location for long. Let's see why.

    The cause stems from what we saw about the distribution of resources in Fact 3, Our Unfair Lives. In particular, natural resources are not now, nor have they ever been, uniformly distributed across the planet. Some places are hot and dry, others are cold and wet. Some have flat, fertile soil, and others have rocky terrain covering ample mineral deposits. It's very, very difficult to find any two spots on the planet that have the same mix of natural resources.

    In that natural resources are what we use for production, it's also very difficult to find any two places that produce the some sorts of goods. Some locales grow barley and others have amusement parks. Some make cars and others have tall buildings that house a bunch of card-carrying members of the second estate.

    With these production differences come differences in job requirements. We all know that card-carrying members of the second estate are worthless when in comes to growing barley, likewise automobile fabrication requires different abilities than operating amusement park rides. When we throw in the fact that different locations provide different amenities, such as climate, and that everyone has their own abilities, likes, and inclinations, it's pretty clear that every location is not suited for every person.

    However, all of this stuff together doesn't necessarily give us the reason for migration. Here's the icing on the cake -- transit costs. It's expensive and time consuming for people to travel back and forth to work every day. That means, most people need to live within sixty, or at most, a hundred miles of their job. You don't find too many people in Florida commuting to work everyday in San Francisco. Likewise Denver is most certainly NOT what you would call a "bedroom" community for Chicago. If you want to work at a particular job in a particular city, then you really need to live in that city -- or very close to it.

    As our economy grows, expands, and prospers, it produces different goods that use different resources. Job opportunities emerge in one locale and fade away in another. Labor and the people who supply the labor can be found migrating from hither to thither to yon. If you have migrated in the past or will migrate in the future, the chances are real good that you're being caught up in some of these fundamental structural changes in the economy brought about by progress. (With progress usually comes improved means of transportation that makes it easier to migrate.)

    Okay, I've weighed the benefit and cost of relocating to Shady Lane, and I've decided that my job is not yet finished in Shady Valley. The pluses of the move just don't compensate for the minuses. So here I stay.

    Here's a tip on migration if you're faced with a similar decision:

    A Migratory Tip

    • If you're considering a major move from one place to another, you need to evaluate the pluses and minuses. We've noted many of the most important considerations early in this entry. However, there may be others peculiar to your own situation. And don't forget about moving costs.

    Gambling On A State LOTTERYxxx A Tycoon Of The MUTUAL FUNDS

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